For papers, 2013 as the year of the paywall
In 2012, they were adopted to make up for sinking ad revenue
December 20, 2012
Two thousand twelve will be remembered as the year in which newspapers fully embraced the paywall.
This next year will be the year in which we’ll begin to get some sense of whether paywalls will really work.
By the end of 2012, more than 300 papers had walled off their content, following years of hand-wringing over the best way to monetize their online audiences.
Paywalls will undoubtedly help shore up waning revenue. But whether paywalls alone are truly the answer to newspapers’ woes is far from clear.
“I don’t think they had much choice,” one print buyer says of papers instituting paywalls. “But I’m not sold on whether this is the ultimate solution to the revenue problem.”
Certainly in the short term it will be difficult to generate enough revenue from paywalls to balance out the huge declines in print ad revenue that have hurt newspapers so deeply the past few years.
The worry is that papers, in pinning their hopes on paywalls, will be slow to pursue other potential revenue streams.
As a lot, newspapers’ owners have a long history of shunning new ideas, choosing to believe their past glories insulated them from incursions by new technologies, most notably the internet.
The inspiration for the great push into paywalls, of course, is The New York Times, which led the way with a metered model it introduced not quite two years ago. Readers are required to begin paying after 10 free views per month.
The Times’ weekday digital subscribers now outnumber its weekday print subscribers, and the paywall is generating an estimated $100 million per year, a significant amount.
Still, the Times’ paywall revenue is not offsetting the amount the paper is losing in print ad revenue, and it’s not known at this point when or even whether it ever will.
Further, even if it should at some point, that’s no reason to believe similar paywalls will reverse the fortunes of papers elsewhere in the country. The Times is, after all, The Times, a superior newspaper that draws readers from all over the world for its coverage.
The Times has made the investment in quality to do that. Few other papers can make that claim.
Indeed, over the past half dozen years in particular, papers across the country have been slashing news staffs as part of cost-cutting measures, even as analysts warned of the longer-term consequences.
Over the last year or so, they’ve been so busy get their paywalls up that they’ve given little or no attention to coming up with new and interesting ways to keep readers engaged.
Analysts all agree that newspapers need to make serious investments back into their newsroom. They also need to be reinventing how they cover the communities in the digital age.
People ages 18-34 aren’t dependent on newspapers in the same way their parents are. They grew up with email and Google News and social networks, and they need an incentive to look to the paper for news and information.
Right now they aren’t getting that.
Paywalls should be the first step in a multi-pronged approach to the digital future of newspapers. If papers realize that this year, then perhaps they can avoid repeating past missteps, such as allowing readers to access their content for free online for so many years.
Meanwhile, ad revenue for newspapers will continue its steady decline.
Total ad revenue was off 8 percent this year, according to ZenithOptimedia, to $24.975 billion, and will fall another 8 percent next year, to $22.977 billion.
And by 2015, newspaper ad revenue will be less than half what it was in 2008, under $20 billion.
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